US court directs Zoho's Sridhar Vembu to post massive USD 1.7-billion bond in divorce case

New Delhi: A US court hearing the divorce case of Sridhar Vembu, co-founder and chief scientist of software firm Zoho Corporation, has directed him to furnish a bond of USD 1.7 billion (around Rs 15,323 crore), citing apprehensions over asset transfers after the filing of the divorce petition and their possible effect on the division of marital property.

Referring to findings made ahead of trial, the California Superior Court noted that Vembu had failed to fully disclose certain financial dealings and had acted “without regard for the law”, according to a report by The News Minute.

In an order passed in January 2025, the court observed that the movement of assets after divorce proceedings began violated automatic temporary restraining orders meant to safeguard the marital estate. The directive followed an ex parte application filed in November 2024 by Vembu’s estranged wife, Pramila Srinivasan.

The court said such transfers could hamper its ability to equitably divide assets and raised the possibility that the petitioner may be unable to satisfy any monetary award granted to the respondent if assets continue to be shifted out of the United States.

Vembu, along with two of his brothers, had founded AdventNet in 1996 as a software development firm catering to network equipment providers. The company was later rebranded as Zoho Corporation in 2009.

In 2019, Vembu moved to his ancestral village in Tamil Nadu and began managing Zoho from there. He initiated divorce proceedings in 2021.

According to the report, the divorce case focuses on the division of marital assets accumulated during the couple’s marriage while they were domiciled in California.

Under California law, assets acquired during marriage are treated as jointly owned, regardless of their physical location.

California family law

In its order, the court reiterated that under California family law, any property acquired during a marriage while the couple was domiciled in the state qualifies as community property, irrespective of whether such assets are located within or outside the US, and applies across all asset categories.

In her ex parte plea, Pramila sought court intervention to stop a proposed transaction which, she argued, would transfer a revenue-generating community asset in the US to an external party. This pertained to a restructuring involving Zoho’s US operations.

Multi-step transaction

As per the report, the court examined a multi-layered transaction under which Zoho Corporation’s US business—then a wholly owned arm of Chennai-based Zoho Corporation Pvt Ltd and considered part of the marital estate—was proposed to be moved to a separate entity controlled by Tony Thomas, a longtime associate of Vembu.

The proceedings have drawn attention to post-petition asset movements. The court flagged concerns that such transfers could complicate the fair division of the marital estate and potentially impair the respondent’s ability to recover her share once the case concludes.

Based on the material placed before it, the court concluded that a substantial bond was necessary to protect the respondent’s interest in the community estate. While the petitioner failed to provide sufficient grounds for a lower bond, the respondent furnished adequate evidence to justify a bond of USD 1.7 billion, the report said. The court accordingly directed Vembu to post the bond within 45 days from January 15, 2025. There is, however, no confirmation that the bond has been deposited.